Microsoft Could Succeed in Tablet Space Despite iPad Popularity

By Nicholas Kolakowski |
Posted 2010-06-17

The rise of consumer tablet PCs presents a potential threat to Microsoft,
should manufacturers begin to put streamlined mobile operating systems, such as
the Palm WebOS or Android, on the devices instead of Windows. However, according
to one analyst, Microsoft has a history of responding well to such industrywide
shifts and may very well come up with a strategy to counter.

"In the consumer world, we're talking about trying a lighter operating
system and potentially, for applications, a bigger developer world," IDC
analyst David Daoud told eWEEK in a June 17 interview. Those parameters, he
added, could perhaps have led to a bit of soul-searching on the part of
manufacturers. "In the initial discussions, the direction has been
challenged by themselves, by their internal people-it remains to be seen what
they're doing."

In addition to the Apple iPad, Microsoft also faces tablet competition from
Google, which is collaborating with manufacturers to bring a modified version
of its Android operating system to the devices. Hewlett-Packard's recent $1.2
billion acquisition of Palm will also likely see the Palm WebOS on a tablet-an
unwelcome development for Microsoft, considering that Windows was being touted
as the operating system for HP's upcoming tablet PC during January's Consumer
Electronics Show.

Despite the setbacks implied by HP's likely use of the Palm WebOS and other
manufacturers gravitating toward Android, Daoud said he believes that Microsoft
continues to have an opportunity in the space.

"I'm not convinced Microsoft will completely drop it," Daoud said.
"They're going to do what they've always done very well, which is respond
with all the resources they have to a competitive threat.

"Recall Netscape and the browser wars," he added. "Microsoft
waited a little bit, and then they came out. But now it's a little complicated
because they're dealing with Apple, which has a first-mover advantage. But it's
not over yet."

During a June 3 talk at the D8 conference, Microsoft CEO
Steve Ballmer suggested that a sufficiently customized version of Windows would
indeed run on tablets, and hinted that the stylus-although derided in some
circles as an outdated input method for touch screens-would be a major factor
in the technology's growth.

"Do we think people want to take notes and draw? What's the best way to
do that? Well, there are different ways to do that and we'll support them
all," Ballmer told the audience, according
to a live blog of the event. "Today, we offer devices that do use a
stylus. I certainly believe that people do want to take the things that they do
today with pencil and paper and do them with new technologies."

Accompanying Ballmer onstage, Microsoft Chief Software Architect Ray Ozzie
theorized that tablets and screens were still in their relative infancy.
"I think there's going to be success in a number of form factors-in the
pad form factor, in the tablet mode. I think there will be appliancelike
screens that will be in our living rooms," Ozzie said. "There are
certain fundamental differences in productivity in the consumption and creation
experiences, though. Both must exist on these devices."

But a number of analysts have said Windows 7 can only succeed on a tablet if
Microsoft follows a few key steps. According to Forrester analysts J.P. Gownder
and Sarah Rotman Epps, in a May 27 report on the topic, a modified version of
Windows 7 must present "a simple, streamlined, guided experience" for
users.

"Microsoft and its partners must develop UX shell(s) appropriate to the
tablet format to compete with Apple's excellent iPad experience," the analysts
wrote. In addition, Microsoft and its partners must arrive at an appropriate
price point: "If a sub-$499 tablet offers a bad consumer experience, it
will fail. Prices above $750 would almost certainly be too high for a
complementary device that acts as a second, third or fourth PC in the
home."

The analysts also suggested that Microsoft integrate its ecosystem. A tablet
that "syncs with the Xbox 360-with all the implied benefits, including the
'Natal' interface-would be a killer hub for the digital home, enabling
back-and-forth streaming of videos and games that one-ups the capabilities of
the iPad." Natal was the code
name for Microsoft's newly unveiled Kinect
hands-free game controller.

But ultimately, the analysts also opined that Microsoft would need partners
in the endeavor. "Microsoft must keep HP-the largest player in the U.S.
consumer market-in the game and tap into HP's TouchSmart lessons and
assets," the report stated. "Dell, too, is a critical player for the
consumer market. Dell will need more hand-holding than HP, as it lacks the
TouchSmart experience."

Those partners, however, are likely debating their own futures in the tablet
space.